Notice Provision Upon Death of Named Insured
This action arose from the insurer's denial of coverage for a fire loss under a homeowners policy after the named insured died and her daughter occupied the house. This case is Brake v. Shelter Mutual Insurance Company, 2012 WL 1933659.
The decedent, Hamilton, owned and resided in a home insured by Shelter Mutual Insurance Company. In July 2010, Hamilton's daughter moved in with Hamilton. On that same day, Hamilton became ill and was admitted to the hospital where she remained until her death in July 2010. The daughter, Brake, continued living in Hamilton's house after Hamilton died.
It is undisputed that Brake inherited the title to the house. She attempted to contact Hamilton's insurance agent by phone but had to leave a message on the agent's answering machine. However, this message did not relay that Hamilton had died and it is unclear whether Brake left a phone number where she could be reached. Brake did not attempt to call the agent again. An obituary notice appeared in the local newspaper but the agent testified that she did not learn of Hamilton's death until after the claim was made.
In November 2012, a fire destroyed a portion of the house and Brake made a claim. The insurer denied coverage based on its contention that the policy had lapsed because it had not receive notice of Hamilton's death. Brake filed a lawsuit against Shelter Mutual.
The insurer asserted that its policy did not cover the fire loss because Brake failed to notify the insurer of Hamilton's death as required for coverage to continue. Also, the insurer said that the coverage terminated 30 days after Hamilton's death per the express terms of the policy. Brake contended that the policy is ambiguous because it contains conflicting provisions and so, the court should interpret the policy as covering the fire loss.
The U.S. District Court examined the policy and concluded that it was indeed ambiguous. The court found that the ambiguities occurred principally in the general agreements section of the policy. The section dealing with coverage in the event of the death of the named insured stated that if the named insured died, the provisions of the policy would apply to the named insured's legal representative. In applying this provision to the circumstances at hand, the court said that coverage continued after Hamilton's death because Brake was a surviving member of Hamilton's household and was actually living in the insured premises, thus satisfying the provision.
The section dealing with coverage in the event of the named insured's death further provided that in order to obtain continued coverage, any of the people listed must notify the insurer of the death. However, the policy failed to provide any time limit in which this notification must be provided and the insurer was notified of the death when the fire occurred. Therefore, construing this provision in favor of the insured, the court held that the insurer actually received notice of Hamilton's death as required by the provisions of the policy.
The court also found that the insurer's agent received personal delivery of the newspaper in which an obituary submitted by Brake fully identified Hamilton and provided notice of her death. The policy did not explicitly require any particular type of notice and so, when it is construed in favor of the insured, the notice given in this manner was sufficient. Put another way, the insurer received constructive notice of the death of the named insured.
The motion for summary judgment made by Brake was granted. The court found coverage for the fire loss.
Editor's Note: The U.S. District Court for the Eastern District of Kentucky, Northern Division, found ambiguity in the notice provisions of the homeowners policy. The notice provisions failed to provide any time limit in which the insurer must be notified and failed to explicitly require a particular type of notice. This was enough ambiguity to entitle the insured to the coverage she reasonably expected to be provided.